Underinvestment: Real Cause of Iran Railroad Tragedy

Dozens died and more than 100 others were severely injured in what has become one of the worst rail accidents in Iran in recent memory. 

However, huge new investment into Iran’s rail network is seen as helping to make such accidents a thing of the past, reads an article published by bne IntelliNews. Below is the full text.

The disaster occurred when two trains collided at Haft Khan Station near Shahroud, about 400 km from Tehran.

Reconstruction of the crash shows that a train travelling between the Iranian capital and the northeastern city of Mashhad had stopped at the station while another train, the Tabriz-Mashhad, rammed into the parked locomotive.

Following the tragedy, the head of Islamic Republic of Iran Railways, Mohsen Pourseyyed-Aqaei, announced that he would resign from his post. 

AFP reported the following day that Pourseyyed-Aqaei had only resigned after four of his deputies were arrested over the crash.

  “Human Error”

The accident was due to “human error”, Pourseyyed-Aqaei said, explaining that the official at the rail traffic control center had told the train driver to manually disable an automated system that was preventing it from moving toward a broken-down train.

The accident has now become a national scandal after 20 MPs called for Minister for Roads and Urban Development Abbas Akhoundi to be impeached and face parliament over his response to the accident. 

A no-confidence vote on him will be held in the parliament on December 4.

Akhoundi offered his condolences to the families of the victims, many of whom on one of the trains were ethnic Azeris. 

“Since the incident occurred under my jurisdiction, I apologize to the bereaved families, the injured and all the dear Azeris,” Tasnim News Agency reported Akhoundi as saying on November 29.

The train driver of the offending train fled the scene and was arrested in a remote hideout, a judge for the Semnan judiciary stated the following day.

While human error is being touted as the cause of the crash, much of the blame lies in decades of under-investment in the vital rail network in Iran, much of which was built before the 1979 Islamic Revolution.

Iran has suffered severely over the past three decades from a lack of investment in the country’s infrastructure, including railroads. 

At present, Iran has only just over 15,000 km of railroads, much less than in Western European countries, even one-seventh the size of a country like the UK.

Iran’s rail system has faced decades of under-investment and international sanctions against the country have hampered developments in the industry, with many large-scale projects having to be shelved due to the lack of available funds to expand the network.

Just a few days before the tragedy, President Hassan Rouhani inaugurated another regional rail traffic control center in the country’s southern Khuzestan Province, which cost an estimated $82 million.

The new rail traffic control center is part of a wider investment push into the country’s rail network and comes as several foreign firms look to gain from the country’s recent opening up after years of isolation.

  Siemens Takes Investors’ Lead

When sanctions began being removed on the Islamic Republic in January after the implementation of the nuclear deal, German engineering company Siemens was one of the first western companies to rush into the country.

In May this year, Siemens agreed on a multibillion-dollar deal to upgrade the rail network, which followed the signing of its first MoU to work on Iran’s rail infrastructure worth up to €1.5 billion in early January. As part of that deal, Iran’s largest industrial construction company MAPNA Group would produce 500 train carriages in CKD format and Siemens would improve electrification on two lines serving the Tehran-Mashhad line, which could help prevent any further incidents on the line. 

Siemens intends to push ahead with overhauling the current poor state of the railroad and has urged the Iranian government to buy several of the latest railroad locomotives available. Siemens’ Velaro high-speed train, one of the fastest trains in the world, is a likely contender to bring the system up to date, according to the company. The train can reach speeds of 360 km/h at full speed. “Iran is a mature market regarding rail and the country’s demographic change is fueling an increasing need for fast, reliable and safe rail networks to support mobility and industrialization,” Mohsen Nayebzadeh, CEO of Siemens in Iran, said in January.

  Need for $25b in FDI

The country needs an estimated $25 billion in direct investment into its rail network, which has already been designated by 2025, according to Iranian Minister of Industries, Mining and Trade Mohammad Reza Nematzadeh, with an annual expenditure of $1.5 billion.

Some of the increase in Iranian government funds to the sector will be part of the Eurasian region’s new East-West, North-South transport corridor. This plugs into China’s ambitions to build high-speed rail networks connecting Beijing to Istanbul and beyond, dubbed by the Chinese government as its “One Belt, One Road” project.

Russia also intends to invest $1.3 billion in electrifying more than 500 kilometers of track connecting Azerbaijan to Iran’s northern cities and onwards to Tehran. The deal is part of a wider $5 billion credit line from the Kremlin to Tehran to boost its economic clout south of the Commonwealth of Independent States.

The last fatal crash in the country happened in Neishabour (760 km east of Tehran) in February 2004, when more than 300 people were killed after containers of several highly flammable items rolled off track into a village killing all the inhabitants. 

It is unlikely that following the incident, Minister Akhoundi or any other top-level official will stand down–unless impeached in December–as Tehran has much riding on current infrastructure deals like that of Siemens. In fact, removing the minister from his post could further slow deals, as any new minister would need to get acquainted with the several deals underway quickly.